SPRINGDALE -- A pre-pricing report showed members of the City Council that the face value of refunding and improvement bonds would be $205,519,868 -- the total amount the city can borrow, said Wyman Morgan, the city's director of administration and finance
Council committee members voted Monday night to put an ordinance allowing the sale of the bonds on the agenda for consideration at the Council meeting April 10. Crews and Associates and Stephens Inc. created the report for the bonds that will be sold based on the Springdale voters' approval in February.
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Build America Mutual’s
video about Springdale
youtu.be/WgwhBO3EoQc
The total borrowing capacity is more than the city expected, Morgan said. The city and its sales tax revenues have grown since city officials first developed total amounts for the bonds. "We've grown to a point we were able to borrow that much," he said.
The extra income will increase the amount tagged for road improvements, Wyman said. As of Monday, the face value of those bonds is $81,804,805.
Springdale received an "A-plus stable" bond rating to recommend the city's bonds to investors, Mayor Doug Sprouse shared.
Standard & Poor's issued the credit rating based on the city's ability to pay back the bonds, explained Bob Wright of Crews and Associates.
"It's a very strong rating," Wright said in a phone call Monday afternoon. "It shows the city has a good financial base."
The growing and thriving economy in Springdale earned the rating in part, based on the sales tax receipts for the last 12 months, Wright said. The bonds will be repaid with the extension of a 1 percent sales tax that voters approved in February.
Build America Mutual, a municipal bond insurer with which the city has protected the bonds, created a "Credit Insights" video supporting the sale of bonds by Springdale. It pointed out that Springdale has had an annual average growth rate of 3.2 percent since 2001, with a slight dip during the recession in 2007 to 2010. Current sales tax collections are adequate to cover 1.2 times the maximum annual debt on the bonds, the video showed. And any additional revenue from the sales tax must be used to pay off the bonds early.
The diversity in the city's economy is a positive, meaning the city earns revenues from a variety of industries, Wright said.
"We're not just dependent on one industry," Sprouse said. "We don't have all our eggs in one basket."
Build America recorded Springdale's economy as 22 percent trade and transportation, 21 percent professional and business services, 14 percent government, 11 percent education and health, 11 percent manufacturing and 21 percent other.
The story of Springdale has been well-received across the country, Wright said. "The rating agencies and bond insurers are very aggressive about these bonds. They want this transaction," Wright said. "They are very interested in Springdale and what's going on there. That's a credit to your city leadership.
"They see Springdale is the 14th fastest growing area in the country. They see Springdale is the fastest growing city in Arkansas. It's smack-dab in the middle of Northwest Arkansas' growth. They see that Springdale has a very strong and long history of paying off their debts quickly. They see the money is going to be returned.
"They see the potential," Wright said, mentioning the 1,000 acres for development in the city's overlay district that includes Arvest Ballpark and Arkansas Children's Northwest hospital, as well as the projects to ease traffic flow around the city.
The closing date for the bond sale is May 17, and interest rates the city will pay on the bonds will be locked in Monday, Wright said. He said he anticipates a favorable rate for the city.
NW News on 04/03/2018